TaxTMI 
TaxTMI 
2019 (6) TMI 356
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....ribunal dated 30.07.2018 in CP(CCA) 9/230-232/NCLT/MB/MAH/2018, approved by the Ministry of Information and Broadcasting on 17.12.2018. Thereafter, the name, Vijay Television Private Limited, stood changed to Asianet Star Communications Private Limited w.e.f. 7.1.2018. The petitioners sought amendment of cause title and the miscellaneous petitions were ordered on 20.03.2019. Common submissions in regard to the three matters have been advanced by both sides and thus a single order is passed in regard to all three Writ Petitions. 3. I first take up W.P.No.25328 of 2018 pertaining to assessment year 2011- 12. The facts relevant to appreciate and adjudicate upon the lis before me are as follows: (i) A return of income was filed by the petitioner in respect of assessment year 2011-12 on 28.11.2011 and a revised return filed on 28.03.2013. The petitioner amortised certain expenditures incurred on programme costs and film rights. The return of income was accompanied by the required audited financials including profit and loss account and balance sheet reflecting all details of the aforesaid claim. (ii) Schedule 14 of the profit and loss account set out the details of ....
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.... Film rights with limitation on the number of telecast during the license period are amortised on a straight-line basis over the license period or on telecast basis whichever is earlier. 2) Programs pending completion are carried at cost. Cost comprises production cost and direct overheads. 3) Inventory of tapes are stated at lower of cost and net realizable value. . . . . (vi) A notice under section 143(2) was issued picking the return up for scrutiny and questionnaires under section 142(1) were issued to the assesssee calling for objections in regard to several proposed additions/disallowances. The petitioner/assessee appeared before the Assessing Authority with its responses to the issues raised by the officer as well as those discussed in the course of assessment proceedings. (vii) Vide submissions dated 21.03.2014, specific details called for and documents sought were furnished including a copy of the tax audit report called for by the Assessing Officer. (viii) Then again, a break-up of the details of amortisation of the expenses incurred on television programmes, movie telecast rights and events was sought and the petition....
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....x Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five assessment years. 7. In accordance with the above, the petitioner filed a return of income and sought the reasons on the basis of which the assessment had been reopened. The reasons were supplied on 09.05.2018 and read as follows: 'The reasons for reopening of the assessment in your case for the AY 2011-12 are hereby communicated as under: 1. It is noticed from the records that programme/film rights amounting to Rs. 61,49,64,000/- for the A.Y.2011-12 were claimed by the assessee under the head - "Operating and Other expenses"(Column....
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....and in the absence of any application of mind to, or finding upon this issue, the assumption of jurisdiction in terms of Section 147 was valid. 11. The facts in W.P.No.25331 of 2018 relating to proceedings for reassessment in regard to assessment year 2013-14, are identical in all respects to the facts in W.P.No.25328 of 2018 excepting for the amounts involved. Since the amounts are not material for deciding the legal dispute in question, I do not propose to repeat the facts yet again but adopt the narration as above in regard to this assessment year as well. In law, the proceedings for re-assessment have been initiated within a period of four (4) years as stipulated in terms of Section 147. 12. Further, the petitioner has also placed on record a copy of a communication dated 15.11.2017, which, according to it, was furnished to it by the Assessing Officer. This note, signed by the Sr. Receipt Audit Officer/ITRA Review Party, is to the effect that the Audit Department has noticed that programme/film rights for AY 2013-14 and AY 2012-13 were claimed as revenue, but was of the view that the expenditure ought to have been capitalised with depreciation granted at the rate of 25% a....
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.....09.2014. (vi) The petitioner/assessee appeared before the Assessing Authority with its responses as sought for in the course of assessment proceedings. Vide reply dated 15.09.2014 copies of the audited financials as well as the Tax Audit Report under Section 44AB of the Act, Form 3CA and complete annexures as called for by the Assessing Officer were furnished to the officer under acknowledgement. (vii) The officer had, in addition to the issue of amortisation of expenses, also raised an issue in regard to tax deduction under section 195 of Act on foreign remittances. The petitioner, vide its reply dated 30.03.2016 pointed out that the expenditures incurred in foreign currency had been duly debited to the profit and loss accounts. Moreover the remittance had, in fact, been subject to tax deduction in all cases except where such deduction was not required in law. To this effect, Certificates of the Accountant had been obtained in Form 15CB. All material in support of the aforesaid position was available on record and, in any event, were yet again furnished for the perusal of the officer. 14. Upon consideration of the aforesaid material, an order of assessment un....
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....to the UAE that did not call for any deduction in law. 18. The petitioner specifically drew attention to the fact that the issue of amortisation of the program cost/film rights had been a subject matter of revision proceedings under section 263 of the Act for assessment year 2010-11. The Principal Commissioner of Income Tax had examined the issue in detail and accepted the stand adopted by the assessee. The copy of the order was supplied to the officer in course of the proceedings for the proposed, impugned re-assessment. 19. The Assessing Authority rejected the objections by the impugned order dated 28.08.2018. The impugned order, in summary, states that the officer, to initiate proceedings for re-assessment only requires prima facie belief that income has escaped assessment that is present in the instant case. His justification for the assumption of jurisdiction to re-assess, is extracted as follows: • The Assessing Officer had a reason to believe that there was escapement of income based on the information available. • There was material tangible before the Assessing Officer to form a belief. • There was no change of opinion as this i....
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....of four years but before expiry of six years from the last date of the assessment year in question. The provisions of section 147 set out a limitation of four years for proceedings to be initiated for escapement of income, and a further period of two years provided that the Revenue is in a position to establish that the escapement had been occasioned by virtue of failure on the part of the assessee to either file a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or 148 or to disclose fully and truly all material facts necessary for the assessment for the relevant assessment year. 25. The question to be determined would thus be whether there has been a full and true disclosure of income by the assessee in the assessment year in question. The admitted facts, as narrated above, reveal that the assessee has been regularly amortising expenditures incurred on programme and movies costs and a consistent method of accounting is being followed in this regard over the years. All details of the claims, such as the break -up of the amounts of the specific programmes/events/movies that the expenditure relates to, have been provided along with t....
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....ssessee to disclose fully and truly the material facts necessary for the assessment years for the respective years and as such Section 147(a) has no manner of application and is not attracted in the facts of the matter under consideration. The High Court on consideration of the facts came to the conclusion that the Tribunal was justified in coming to the said finding and we also record our concurrence therewith. 28. The Supreme Court in the case of Commissioner of Income Tax Vs. Kelvinator of India Ltd. and another [(2010) 320 ITR 561 (SC)] has held thus: However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf o....
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....ment passed originally, though under section 143(3), cannot be said to have considered the issues at all. The question of review of such an order does not arise in these circumstances. 33. I disagree. The records contain all relevant details in regard to the issues in question, being the expenditures amortised as well as foreign remittances and deduction of tax thereof. Counsel for the revenue has, very fairly, not disputed this factual aspect even slightly. In the present case, the two questions proposed for reassessment, being amortisation of programme/movie cost and deduction of tax on foreign remittance, arise from a perusal of the financials itself. The audited financials, including the profit and loss accounts and audit report, present clearly all details in regard to the aforesaid two issues. 34. An assessing officer, in the course of assessment proceedings encounters several issues arising from a return of income filed by the assessee. Courts have consistently held, that the burden laid upon the assessee in the matter of framing of assessments and the extent of role to be played by it, would be restricted to making a full disclosure of all relevant items and issues fr....
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....n the discharge of his regular functions would be legally presumed to have been properly and regularly performed and executed. Thus, even in cases where there is no discussion in regard to specific issues, if it is established by the assessee that all material relevant and germane to that issue were available before the Assessing Officer, easily discernible and part of the record, reassessment is impermissible. Then again, it does not stand to reason that an officer, once convinced by the submissions of an assessee, will proceed to devote time to recording is agreement in a detailed and reasoned fashion. The legitimate and reasonable expectation is that a detailed and speaking order is passed in cases where he differs and dissents from the stand of the assessee. On this score, the arguments of Mr.J.Narayanasamy in this regard have no merit and are rejected. 36. Mr.Narayanaswamy next relies on Explanation (1) to section 147, which states that production of account books or other evidence from which material evidence could, with due diligence have been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the foregoing proviso. ....
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.... relevant portion of the judgment is extracted hereunder: At this juncture it is to be taken note of that Explanation 1 to Section 147 of the Act is explicit and clear that books of account or other evidence has to be traced out to disclose further facts which could be discovered by the Assessing Officer. Nor will the assessee be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence which might have been discovered by the Assessing Officer if he had pursued the investigation on the basis of what has been disclosed. The position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them--including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. It is to be noted that Explanation 1 has nothing to do with inferences and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Assessing....
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....culars have been produced/filed/furnished by the petitioner at the first instance before the authorities, in a transparent fashion. It is for the officer to have appreciated the same and arrived at the necessary and appropriate inferences at that juncture. Having missed the bus at that point, the Department cannot seek to re-assess the income as culled from material already on record, as this constitutes a review of the original assessment. Admittedly, and even as per the reasons stated, there is no new material that has come to the notice of the authorities and the impugned exercise is undertaken solely on the basis of the materials already supplied by the petitioners and available on the records of the department. This argument of the revenue is also consequently rejected. 42. Mr. Narayanasamy, relies on the decisions relied upon by the officer in the impugned orders as well as the judgment of the Supreme Court in the case of Raymond Woollen Mills Ltd. V. Income-tax Officer ([1999] 236 ITR 34 (SC)) and the Delhi High Court in the case of AGR Investment V. Additional Commissioner of Income Tax (333 ITR 146) for the proposition that where there is prima facie material on the bas....
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.... 15.11.2017 SR.RECEIPT AUDIT OFFICER/ITRA REVIEW PARTY Reasons for re-assessment (AY 2011-12) 1. It is noticed from the records that programme/film rights amounting to Rs. 93,43,60,000/- for the A.Y.2013-14 were claimed by the assessee under the head - "Operating and Other expenses"(Column -14). The same is required to be capitalized and depreciation at the rate of 25% thereon is to be allowed, since the asset comes under the Category of "Intangible Asset". Audit objections (AY 2013-14) OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT CENTRAL, CHENNAI IT Entt. Sector Review As NO.1 Dt.23.10.2017 Name of the Asessee Asianet Communications Ltd., Chennai PAN AAACA246OP Status COMPANY Assessment Year ....
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....se consider. ...Sd/- SR.RECEIPT AUDIT OFFICER/ITRA REVIEW PARTY Reasons for re-assessment (AY 2013-14) 'The reasons for reopening of the assessment in your case for the AY 2013-14 are hereby communicated as under: It is verified from Annexure that foreign expenditure debited to the P & L Account for the period April 2012 to March 2013 was GBP2,875 (Rs. 88 Approx.), USD 1,01,812 (Rs. 59 Approx.) and AED 26,34,985 (Rs. 55 Approx.) for which no tax was withheld. However, tax is required to be deducted u/s 195. According to Section 40(a)(i) of the Income Tax Act, the entire expenses amounting to Rs. 15,11,84,260/- is required to be disallowed. Further, it was noticed that programme/film rights amounting to Rs. 175,41,00,000/- for A.Y.2013-14 were claimed by the assessee under Note 19 - "Operating and Other Expenses". The same is required to be capitalized and depreciation at the rate of 25% only to be allowed as the asset is in the nature of "intangible asset". 45. A comparison of the audit objections with the reasons for re-assessment in the respective years reveal that the assessing officer has done nothing more than simply extract/adopt the audit ....
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....tion related fees and the Agreement for Avoidance for avoidance of Double Taxation between India and the UAE does not contain an Article providing for the taxation of Fees for Technical Services. In any event, the details of the remittances as well as the certification in Form 15B to this effect were duly furnished to the assessing authority even during the original proceedings and are, admittedly, on record. 50. Coming to the issue of amortisation of cost of programmes/films, the annexures to the returns of income reflect the expenditures incurred and claimed on programmes/film rights. In fact, the petitioner has been following a consistent method of claiming expenditures in a particular fashion and the Department has accepted the methodology of valuation and claim for all years except the assessment years in question, being AY 2011-12 and 2013-14. In fact, even after the initiation of the present proceedings for re-assessment, orders under scrutiny have been passed in respect of AY 2015-16 accepting the petitioners' claim. 51. The view proposed to be adopted in the impugned re-assessments is thus a deviation, an aberration so to say, from the regular and consistent view tak....